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Corporate Travel Policies

What type of travel policies do you use? Do you require budgets? Have a Per Diem rate, and if so how is that calculated? Lodging, certain hotel chains/star listing/Per Diem? Air, do you permit only coach, or do you allow business class, 1st Class? How bout booking air fare, how do you handle "last minute"? Lastly, who owns the air miles?

Answers

Topic Expert
Mark Sphar
Title: Chief Accounting Officer
Company: Veracity Payment Solutions
(Chief Accounting Officer, Veracity Payment Solutions) |

I always try to use a policy that protects the company but gives the travelers some flexibility. Sounds easy but takes some tweaking. Accounting folks usually start w/ company friendly plans then have to back off once they roll them out. Get buy-in from the sales guys (or whoever is travelling a lot) before you publish.

Per diem rates - easy for everyone. Big fan. Have given a single amount that handles the entire day. I will break that down between 3 meals in the event someone travels partial day but that may be more of a pain than it is worth. Most cities you can get away w/ 15/15/30 for a $60/day. Will increase for NY/SF/CHI typically.

Bus class airfare over 4 hours of travel. Last minute needs high level of approval. Your call on what that level is. Usually CFO is a good one as folks don't want to have that conversation too often.

Air miles - I have no issues giving to the employee if they want it. If the company uses for cost savings or employee perks, then most folks don't mind the company getting them either. Its the owners using them for personal reasons that gets under peoples skin.

Good luck.

Vik Agrawal
Title: President & Co-Founder
Company: ExpensePath, Inc.
(President & Co-Founder, ExpensePath, Inc.) |

The key thing is to think about what employees need to do their jobs - and in some cases, one policy for the entire company does not work well (for example, salespeople need a higher monthly cell phone limit than most other employees or employees in the US should have different policies than employees in China).

On meals, the most common is a daily allowance for travel meals which usually requires that the employee supply receipt evidence - $75 total for meals per day with receipts required for any individual expense over $25 is fairly typical in the US but we see variation. Per diems are less common but still popular - I have also seen companies that give employees the option of a higher reimbursement with receipts or a lower per diem amount without receipts (i.e. $75/day with receipts or $50 flat per diem). Client//business meals are completely different and often have a policy on a per attendee basis.

Other things quickly: Hotels should be based on a nightly rate policy and a preferred hotel list is a good idea especially for frequent destinations; air travel should typically be coach with other classes only for longer trips or overnight; employees should get the miles - they are disrupting their personal lives for the company. RECOGNIZE that there will be exceptions - and they need to be dealt with fairly but consistently (or why have policies at all?).

FYI, the Sept issue of Controllers Report from IOFM has an interview with me on this exact topic under Internal Controls.

Tamer Guirguis
Title: Account Executive - Adoption Services
Company: DayNine Consulting
LinkedIn Profile
(Account Executive - Adoption Services, DayNine Consulting) |

Each employer sets their own Travel Policy according to their budget and needs. It is recommended have the policy supported by Law and Regulations standards.
Per Diem rates it is a company decision either to follow standard rates that is given by the GSA or not. There is no harm on the company if their rates are below the GSA standards; however, it is recommended to do so in order to be competitor in the employer market. Check GSA standard rates here. http://www.gsa.gov/portal/content/104877
Example:
A) An employee that is going to New York (Manhattan) for a business trip so the rate for a full day is $71.
B) An employee that is going to New York as well but different city (Binghamton / Owego) then the rate is for a full day is $46
C) The same method is followed for loading as well. I encourage you to check the rates on the GSA site.
As for Air, It's an employer decision to book the type of class for its employees, some employers they book coach class for all their employees and Bus for VP& above. And other they go by timing, when a trip exceeds 6/hrs then it’s a Bus class less than 6.hrs is Coach.
Last minute booking require a CEO approval and most of the time happens when it’s an emergency. Otherwise it is set to have employees to submit their request for business travel 14/days in ahead to allow managers the appropriate time for approval.
Air Miles, if it is booked under Employee CC then they own it. If it is booked by corporate CC then it belongs to the employer.

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Related question:

Airfares and lodging are provided and charged to the corporate account. Then an M&IE per diem is provided to the employee within IRS guidelines.

When using a per diem for meals and incidentals expenses, are there any additional costs that can be reimbursed directly outside of these without transitioning the plan to an accountable one?

How does the entity assure compliance with the meals provided by third parties issue?

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Adding on to Tamer's commentary; it often depends greatly on company size. Smaller companies (startups, etc) you might wear several hats, etc., so it is hard to pin down something specific. In that case, I go for "Per-Diem plus Economy Air / Car plus Outliers as incurred".

Larger companies, you should have a more highly refined set of roles, processes etc., in which case you probably have selected hotels with direct bill, travel agents, etc, which save you significant $ in the long run.

Note, I have never (since I left NYC long ago) segregated execs into Business and the rest into economy. Instead, everyone gets economy, and the execs can upgrade if they feel like it. That might be a bit populist of me, but I feel that execs need to set the tone for the rest of the company.

I do like trying to put in a budget by department, and let the department heads manage their own P&L and decide whether or not a last minute, totally expensive trip is worth passing on a new hire for a month. That assumes efficient budget controls of some sort, and is usually seen in more stable companies.

Vik Agrawal
Title: President & Co-Founder
Company: ExpensePath, Inc.
(President & Co-Founder, ExpensePath, Inc.) |

Wholeheartedly agree on the exec/non-exec travel class issue - it is a real morale killer when business class is determined by something other than trip specifics like distance (funny thing was that my experience with this was in Silicon Valley and the execs held onto it so hard that it even survived as a subsidiary policy once the company was acquired by a huge company that had a more progressive policy - just awful). Also, there can be a significant cost to flying execs in business class for short trips, especially in Europe.

Also agree that smaller companies don't have as much time to dedicate to finite policies, although automation can get them there if the solution is built with SMBs in mind and is full-featured, easy to use, and affordable. And the right solution can also include department budgetary tools.

Anonymous
(Financial Analyst) |

I'm looking into doing per diem for our employees. Considering lumping hotel, meals, local transport and incidentals into one. One question though: How do you give them the per diem? cash? a pre-loaded card? Through payroll?

Thanks,

Vik Agrawal
Title: President & Co-Founder
Company: ExpensePath, Inc.
(President & Co-Founder, ExpensePath, Inc.) |

You won't be able to do that and be within IRS requirements since any expense over $75 needs to include receipt evidence and some basic info. So the only thing you could do is set separate expense category per diems that max out at $75 or less (and the one for hotel wouldn't work for your employees).

But to answer your question, you could either have employees do expense reports after the spend and reimburse them (thru payroll or otherwise) or a card solution (pre-paid or credit card and you may still want them to do expense reports to provide the detail and backup you need). I would not recommend cash advances but I have seen them occasionally in certain industries like construction (more like a petty cash system).

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Echoing Vik,
The per-diem is 1) Hotel and 2) Meals, in two parts. There is no safe harbor for the rest of it.
Note the per-diem doesn't care about reality. If I visit Moscow and stay with a friend, I still collect my $250 (or whatever) per night as an expense reimbursement. Technically the employee is supposed to net that against "unreimbursed business expenses" at the end of the year.
Paying the per-diem....do it exactly the way you do other expenses. It is a reimbursement.
Also, if you're doing per-diem, don't pay overages. If I choose per-diem, and then I overspend, that is my (the employee's) problem. The per-diem agreement should call this out.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I just traveled for a new client. They are a PE firm and had an interesting set of policies/guidelines.

1. Everyone (from the MD on down) flies coach, anywhere (whether an hour trip or to Australia). If you want a upgrade you pay for it (or use your miles). Airfare should be purchased 7 days out if at all possible to minimize cost.
2. Reasonable hotel accommodations (they don't want you to stay in a flea bag, but they also don't want you to stay necessarily in the Ritz either).
3. Same with car rental, meals and entertainment.
4, All expenses are on the "employees" credit cards, so they get all the air miles.

I spent the week with the MD, and while we were in different hotels, she asked if I wanted to move hotels (wasn't worth it from my POV) and we happened to do dinner together, again at reasonable restaurants, she stayed true to the policy...

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